In 2017 we were lucky enough to have three extra days to file our 2016 tax returns. This year’s April 18 deadline gave procrastinators a full 72 additional hours to file with the IRS. Despite this extra time, millions have still missed the annual filing deadline.
If you missed the 2016 filing deadline, it’s not too late to take action. While the IRS may eventually decide to impose late filing and payment penalties upon you, this does not mean you shouldn’t make an effort to come into compliance as soon as possible. For those that failed to file on time the IRS offers the following recommendations.
If you owe federal income it’s essential that you file and pay ASAP. Doing so will minimize any penalty and interest charges the IRS can assess. Keep in mind if you owe money and file late you will be penalized for both filing late and paying late. If you are owed a tax return, there is no penalty for filing late. If you file your 2016 tax return 60 or more days after the due date or extended due date, the minimum penalty is $205. If you owe less than $205, your penalty will be 100 percent of the unpaid tax, or double your original amount owed. The penalty can be as much as 5 percent of unpaid taxes each month up to a maximum of 25 percent. The penalty for late payment is normally 0.5 percent of the unpaid taxes per month. It can add up to as much as 25 percent of the unpaid taxes.
Just about any taxpayer can use IRS Free File to e-file their federal taxes. For those who earn less than $64,000 annually a free tax software is available. For those who earned over $64,000, Free File Fillable Forms to e-file are available. Fillable forms uses electronic versions of IRS paper forms. Fillable forms work well for those who normally do their own taxes. Both of these options are available up to the Oct. 16 filing extension deadline. Whether you choose to use IRS Free File or someone else prepares your taxes, IRS e-file is also available through Oct. 16. According to the IRS, “E-file is the easiest, safest and most accurate way to file a tax return.”
If you can’t pay in full, don’t panic. However, you should always pay as much as you can afford. The IRS is willing to work out payment plans with taxpayers, but you must adhere to their terms and act in good faith. The IRS offers several ways for you to pay them, including electronic payment options, direct debit, cash, check or money order. The IRS may also be willing to enter into an offer in compromise with those that owe IRS debt. An IRS Offer in Compromise allows you to cut a deal with the IRS to pay significantly less than what you owe. Not all taxpayers are eligible for an Offer in Compromise. The tax attorneys at Patrick T. Sheehan & Associates can perform a thorough financial analysis to determine if you are eligible for an IRS Offer in Compromise.
If you owe unpaid back taxes, hiring a qualified tax attorney to represent you before the IRS is essential. Chicago tax attorney Patrick T. Sheehan & Associates assists clients with unfiled tax returns and all types of unpaid tax debts and penalties. Contact us, we can help. Call us before the IRS calls you!®